Thursday 21 April 2016 10:52 pm

Visa shares slump as it changes Visa Europe deal

Visa's shares skidded down nearly five per cent in after market trading after the credit and debit card giant cut its full-year revenue growth forecast.

The company now expects full-year revenue to come in between seven to eight per cent, lower than its previous forecast of high single-digits to low-double digits.

Read more: Visa's contactless payments soar by 250pc in the UK

It also announced an amendment to its deal to buy former subsidiary Visa Europe. The cash consideration of the deal will be upped to €1.75bn (£1.38bn), following feedback from the European Commission. 

The deal is expected to close in the firm's third quarter.

Visa Europe was part of Visa's network until 2007, when it was left as a separate entity as the rest of the units merged to form a single company ahead of Visa's IPO in 2008.

The share price slide came despite its profit rising 10 per cent to $1.71bn in the second quarter ended 31 March, from $1.55bn a year earlier. Revenue rose 6.4 per cent to $3.6bn from $3.41bn.

"Visa reported solid financial results in the fiscal second quarter," Chief executive Charlie Scharf, said in a statement.

Read more: Visa Inc share price down as it agrees to buy former subsidiary Visa Europe for €21.2bn

"The continued headwinds of the strong US dollar, lower oil prices, and an uneven global economy are driving continued weak cross-border spend, but domestic spend continues at reasonably strong levels consistent with last quarter."

"The US consumer remains strong, but we see weakness in China, Brazil, and oil based economies. Since we are not seeing any material improvements in economic trends, we are cautious as we head into the second half of fiscal 2016."